Shares of both Seagate and Western Digital are getting battered on fears that the hard-drive sector could once again soon find itself with a glut of supply.
At least in part, the Street is reacting to this morning’s downgrade of Marvell by Barclays Capital, which as I noted earlier was in response to indications from Taiwanese component makers of a slowdown PC demand.
Hutchinson Technology shares have collapsed after the company disclosed that Seagate intends to phase out the purchase of suspension assemblies from the company. Hutchinson says the change will occur over 18-24 months. In the March quarter, Hutchinson said, Seagate was about 19 percent of sales.
Seagate CEO Steve Luczo this afternoon said a sharp dropoff in demand in December as the PC market weakened was the primary reason for the company’s larger-than-expected December-quarter loss.
In an interview with Tech Trader Daily, Luczo said the company’s total addressable market appeared to be in the 150 million unit range entering the quarter, and still appeared to be that large well into November. But he says that starting in the back half of that month, demand began to crumble.
Probably nothing. But the company’s stock has taken a jump today, which Web site TheFlyOnTheWall.com attributes to buyout rumors. Since the buyout market is dead right now, it’s most likely just a daydream.
Seagate CEO Bill Watkins is feeling pretty good about the hard disk market. His Asian competitors–mostly Toshiba, Fujitsu and Samsung–are in bad shape, he says, and may have to work together in order to survive. External drive sales are doing well, but the solid-state drive market isn’t gaining the traction that was predicted. Could end up being good news for Seagate.
Yesterday afternoon, I posted a list of how some of the most prominent stocks fared in Wednesday’s mammoth selloff.
Given today’s equally dramatic rally, I thought the list deserved an update–I’ve added just one stock, Microsoft (MSFT), which I inexplicably forgot to include yesterday.
Marvell (MVRL) shares are down sharply again today, pressured this morning by Deutsche Bank analyst Arnab Chanda, who cut his rating on the stock to Hold from Buy. He cut his target price on the stock to $15 from $20.
Everything is lost… unless you buy a Seagate hard drive. Picture a young mother fretting over losing photos of her adorable brood, or a 30-something man afraid he might lose the countless hours of music he’s stored on his PC.
Seagate this afternoon said it is shifting its stock exchange listing to Nasdaq, where the cool kids hang out, from the New York Stock Exchange, while maintaining its current stock symbol.
While munching on a reuben at Birk’s, a steakhouse in Silicon Valley, Seagate CEO Bill Watkins is explaining why he’s not too worried about these trendy new laptops that have everything but a hard drive. On the surface, this would seem to be a big problem. Seagate, after all, is the world’s largest hard-drive maker, with expected sales of more than $3 billion this quarter–so Watkins likes to see his wares go into more gadgets, not fewer.
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